Fuelling Tasmanian jobs, energy security and growth.
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Fuelling
Tasmanian jobs,
energy security
and growth.
1
The Tasmanian Gas Pipeline supports
over 4,200 direct jobs and over 8,550
jobs in total, is crucial to Tasmania’s
energy security and post-COVID economic
recovery, and helps keep energy prices
affordable for everyday Tasmanians.
At a glance:
• The TGP is the only mechanism by which natural
gas is transported in bulk to Tasmania
• The TGP is a significant enabler of economic
activity in Tasmania, helping underpin the
continued operation of numerous major
industrial customers and the more than 4,200
direct Tasmanian jobs they support
• It is the only supplier of gas to the Tamar Valley
Power Station – an essential back-up power
source for Tasmania which played a crucial role
during the 2016 energy crisis, helping keep the
lights on in Tasmania
4,200
Direct
• Following COVID-19, the TGP provides an affordable
jobs
fuel source to drive Tasmanian manufacturing
growth and the state’s economic recovery
• It also provides affordable gas supply for
Tasmanian businesses and households
• Natural Gas provides the cheapest and most-efficient
source of heat to Tasmanian Industry compared to
diesel, fuel oil, LPG or coal, with low emissions
• O
ngoing connection of the Tamar Valley Power
Station to the TGP will underpin Tasmanian energy
security and ensure affordable gas supply to
Tasmanian customers
• The current four-year contract for the TGP to supply
the Tamar Valley Power Station expires at the end
of 2021
• An extension of this contract will provide energy
security for Tasmania at least until other viable
back-up power sources (such as Marinus Link)
come online
8,550
• Once Marinus Link comes online, the Tamar Valley
Power Station can continue to provide grid and
energy security services to support ongoing
renewables Total jobs
2
About the
Tasmanian Gas Pipeline
Commissioned in 2002, the Tasmanian Gas Pipeline • Adds $970m value (GSP) to the Tasmanian
(TGP) is the only pipeline supplying natural gas to economy (three per cent of state’s total)
Tasmania. It transports six petajoules of natural gas
• Unlocks multiple potential investment
per year from Longford in Victoria, under Bass Strait,
opportunities to rebuild Tasmania’s economy
to Bell Bay in Tasmania.
post COVID-19
The 740km TGP is a part of the national network
Importantly, the TGP supplies the majority of
of underground high-pressure gas pipes, which
the state’s major energy users and around 1,000
stretches over 20,000km and serves all of Australia’s
commercial customers and 12,500 residential
states and territories except WA.
customers via Tas Gas Retail, Aurora Energy and
The TGP brings jobs and economic growth to the Weston Energy.
communities it passes through and provides the
opportunity for more than 500,000 Tasmanians to It is also the only supplier
take advantage of the many benefits of natural gas.
of gas to the Tamar Valley
A 2020 Deloitte Access Economics analysis found
Power Station, which is a
crucial back-up power source
the TGP:
for Hydro Tasmania and a
• Directly supports 4,244 Tasmanian jobs
(two per cent of state’s total)
• Supports 8,550 jobs in total (3.4 per cent of
critical asset for the state’s
state’s total) energy security.
Supplies gas to Supplies gas to Critical asset Brings jobs Approximately Transports gas
both industry and the Tamar Valley for long-term and economic 740km long accessed from
townships in the Power Station Tasmanian growth to the the Gippsland
state energy security communities it Basin, with access
passes through to the Eastern
Australian Gas
Market and
potential future
LNG import
terminals
3
TGP as an economic enabler in Tasmania
Fuelling jobs and growth
The TGP is a significant enabler of economic activity in
Tasmania, by supplying a reliable source of energy to
many of the state’s top economic contributors who are
heavily reliant on natural gas.
It is estimated the 20 main users of the TGP contribute
more than $970 million in gross state product to the
Tasmanian economy each year, supporting 4,244 jobs
directly and 8,550 jobs in total.
Importantly, many industrial users rely on natural gas
as a primary fuel for processes requiring heat. Natural
gas is the cheapest and most efficient form of heat and
has low emissions compared with other alternative
energy sources.
Other energy sources can sometimes be substituted
for thermal purposes, but this often requires significant
investment in capital expenditure, so the marginal cost
must be meaningfully lower than gas to be viable.
By adding competition to Tasmania’s energy market
via the TGP, local businesses have been enabled to
be more competitive in Australian markets, as well as
further abroad in Asia.
Small businesses and households have also been
granted access to an alternative energy source,
allowing them to better meet individual needs and
requirements.
Ending the Tasmanian Gas Pipeline’s contract to
supply the Tamar Valley Power Station would
significantly affect cost recovery, and is likely to have
flow on effects for the Tasmanian businesses and
communities it serves.
In order to assist with planning and contracting
requirements, it is also important to give all gas market
participants market certainty at least nine months
It is estimated the 20
before the current contract for the Tasmanian Gas
Pipeline to supply the Tamar Valley Power Station
main users of the TGP expires at the end of 2021.
contribute more than
$970 million in gross state
product to the Tasmanian
economy each year*
* Tasmanian Gas Pipeline Economic Analysis, Deloitte Access
Economics, September 2020
4The main users of the TGP
and their economic contribution
Direct Value
Customer Description employees added (m)
Grange Resources Major iron ore miner in the north-west 562 $255
Simplot (Ulverstone
Vegetable processor with three factories 700 $107
and Devonport)
Bell Bay smelter Aluminium smelter near George Town in the north 480 $89
BOC Westbury LNG plant in the northern part of the state 9 $4
Fonterra (Spreyton,
Dairy product processor with three major facilities 180 $10
Wynyard and Tamar)
Tas Dairy Products Dairy product processor with facility in Smithton 50 $23
Tas Advanced Minerals Produces silica flour for glass production 35 $1
Cadbury Chocolate factory outside of Hobart 360 $152
Tas Alkaloids Produces agricultural products such as opiates and cannabis 165 $34
Nyrstar Hobart Pty Ltd Smelter in the south producing zinc and sulphuric acid 430 $57
Cascade Brewery Brewery near Hobart that produces beer as well as soft drinks 106 $45
Lion Burnie (Lactose) Manufactures specialty cheeses 250 $36
J Boags and Son
Brewery located in Launceston 65 $45
Brewing Ltd
Temco Manganese plant 250 $26
JBS Abattoir Australia A multi-species processing facility 331 $38
Impact Fertilisers Fertiliser producer 50 $10
Ecka Granules Aluminium powder and aluminium granules producer 41 $19
Top Centre Laundry Commercial laundry provider 50 $7
Austral Bricks Producer of bricks and other similar products 30 $3
Venarchie Asphalt Pavement and asphalt manufacturer 100 $8
TOTAL 4,244 $969
Source: Tasmanian Gas Pipeline Economic Analysis, Deloitte Access Economics, September 2020
5Energy security
Helping keep the lights on in Tasmania
2015/16 Energy Crisis “The TVPS, particularly the combined cycle gas
Gas is a crucial component of the multi-faceted turbine (CCGT), should be retained at least until
energy supply structure Tasmania relies on to ensure there is a reliable alternative in place to mitigate
the electricity system is constantly able to meet state against hydrological and Basslink failure risk,”
demand and avoid blackouts. the Taskforce said.
Recent history has shown Tasmania’s primary sources The Taskforce found that “If the situation arose whereby
of energy (Hydro and Basslink) not to be failsafe. the TVPS was permanently unavailable and energy
storage levels were not adjusted to reflect this loss of
In fact, in 2015/16 a combination of an extended generation potential, then [Tasmania’s] electricity energy
drought affecting dam levels and a break in the security situation would be assessed as Susceptible”.
Basslink interconnector to Victoria resulted in the
“Tasmanian Energy Crisis”. The report also noted:
During the seven-month crisis Tasmania’s hydro dam “While retaining the TVPS on standby and increasing
levels fell to just 12 per cent and the state was literally energy in storage does have a financial cost, the cost
only weeks away from rolling blackouts before the is very low for the energy security it provides when
drought broke. compared to other states.”
Through the period the gas-fired Tamar Valley Power For example, in Western Australia, AEMO pays up
Station operated at full capacity which conserved to $140,000 per MW of reserve capacity in order
remaining water storages and prevented widespread, to maintain energy security. The TVPS provides
extended black outs. Without this, Tasmania’s lights approximately 380MW of reserve capacity, which would
would have gone off. cost over $50 million per year using this model which
is considerably more than what it currently costs
Current situation Tasmanians to maintain TVPS in a state of readiness.
It is important to note, since the 2015 Basslink Most recently, the Tamar Valley Power Station CCGT
cable outage, its operations have been limited to operated at full capacity in early 2019 in order to
500MW capacity as a precautionary measure. With support Tasmania’s hydro system and keep dams above
no conclusive outcome of investigations into the Prudent Storage Levels.
outage’s cause, there is ongoing uncertainty as to
whether another serious outage could occur, with data With climate extremes and uncertainty regarding
suggesting on average an outage is expected every long-term trends increasing, if low rainfall does again
10 years for high-voltage direct current off-shore occur, it is critical Tasmania is not left to rely on a
transmission systems. demonstrably fallible single piece of infrastructure in
order to ensure energy supply security. The state needs
Subsequent to the Energy Crisis, the Tasmanian the support of the reliable gas supply provided by the
Energy Security Taskforce recommended as a Priority Tasmanian Gas Pipeline.
Action in its final report that the TVPS be retained.
With climate extremes and uncertainty... it is critical
Tasmania is not left to rely on a demonstrably fallible
single piece of infrastructure in order to ensure energy
supply security. The state needs the support of the reliable
gas supply provided by the Tasmanian Gas Pipeline.
6Current and future Tasmanian
Government Policy
Following the report of the Tasmanian Energy
Taskforce, the Tasmanian Government committed
to retain the Tamar Valley Power Station for energy
security purposes.
Over recent years the Government has also
proactively moved to further improve Tasmania’s
energy security with a target of making Tasmania
100 per cent self-sufficient in renewable energy
by 2022; and the pursuit of a “second Basslink” The Marinus Link
electricity connector across Bass Strait (the The proposed Marinus Link currently
Marinus Link). pencilled in for commissioning in 2028 will
Most recently, the Government announced a new considerably alter the Tasmanian energy
target of doubling Tasmania’s renewable energy landscape.
capacity by 2040, as part of the “Battery of the Not only will the link act as a back-up for
Nation” concept. providing energy into Tasmania should energy
Notwithstanding, the role of natural gas remains supply be placed in doubt by low dam levels
notable in the Government’s plan: or Basslink cable failure, it is also expected
to catalyse a significant amount of on-island
“While Tasmania’s energy
renewable energy development
generation is dominated However, at this stage, no final decision has
been taken to proceed with the Marinus Link.
by renewable energy,
other energy sources play
It is vital for Tasmania’s energy security and
growth of renewables that the TVPS continues
an important part of the to operate as a back-up energy source. Once
state’s energy mix. We Marinus Link comes online, TVPS can continue
recognise that gas supply
to provide grid and energy security services
to support ongoing renewables operations
and security is important for especially during periods of low water inflows
both industrial and domestic and low wind.
users in Tasmania.”
(Draft Tasmanian Renewable Energy Action Plan 2020, page 16).
7Powering Tasmania’s
post COVID revival
As Tasmania moves to recover from the economic In addition to manufacturing, the Tasmanian
impacts of COVID-19, the need to diversify the state’s Government’s focus areas for the state’s COVID-19
economy has been highlighted. recovery include bringing forward infrastructure
projects for construction, as well as agriculture, the
The pandemic has also brought issues of domestic
visitor economy, aquaculture, renewable energy, skills
capability and self-sufficiency to the forefront of
and education, and trade.
people’s minds.
A study conducted by Deloitte identified a number
In order to reduce public anxiety surrounding future
of industries heavily reliant on gas offer significant
potential interruptions to supply chains, there will
opportunities for export growth in the coming years,
be a greater need for governments around the world
many of which align with the Government’s focus areas.
to guarantee domestic security for a number of
essential products and services. This presents opportunities for the TGP to further
support economic recovery in the state, particularly
The supply of gas to enable on-island manufacturing
with a focus on advanced manufacturing, mining,
is critical to ensuring self-sufficiency in Tasmania.
hydrogen opportunities and dairy export.
Potential growth industries
identified by Deloitte
Advanced manufacturing Resources/mining
The Tasmanian government has historically as well as In addition to ongoing competitive gas supply
recently identified advanced manufacturing as a focus keeping existing resource and mining projects
area for the state. Many industries in this category are viable, several development opportunities which
gas-intensive and represent an opportunity to support will require significant future energy use in the
economic recovery post-COVID-19. sector have the potential to be supported by gas
from the TGP. These include:
The massive disruptions caused by the pandemic to
global and national supply chains have also led to • Alcore aluminium fluoride plant
many companies and organisations re-assessing supply • Heemskirk tin mine
chain risks. This opens increased opportunities for • Rogetta iron ore project
more ‘on-shoring’ of manufacturing activities. • Mount Lindsay tin/tungsten mine
• Renison expansion project
Natural gas is commonly used in manufacturing for
• Dolphin tungsten mine
industrial process heating. This process is used in
the manufacture of most goods and is particularly
important to Tasmania for manufacturing including
dairy, food processing, aluminium, zinc and fertiliser.
8Hydrogen Dairy export
In March 2020, the Tasmanian Government announced
Tasmania has a strong reputation and comparative
its renewable hydrogen action plan outlining their
advantage in producing high quality dairy products,
vision for having a renewable hydrogen generation
with gas the primary energy source used for
facility operational by 2024 and commercially viable
processing.
by 2030.
There is growing demand for the export of these
Locations in close proximity to large users of the TGP,
products, particularly in Asian markets.
such as Burnie and Bell Bay, have been earmarked as
potential hydrogen industry hubs, meaning that these While COVID-19 has impacted short-term demand, the
hubs could be directly integrated with the TGP. forecast for Australian dairy exports was strong at the
start of 2020, representing an opportunity for Tasmania
There are significant opportunities for the TGP to
to ramp up future production to capitalise on increased
facilitate this hydrogen vision, either by blending with
long-term international demand and the state’s
natural gas in the gas network, through export of
comparative advantage.
high-hydrogen blend gas to the mainland via backhaul
services on the TGP or through the supply of gas to
produce a blue hydrogen blend via steam reformation.
Steam reformation is the cheapest, most efficient and
most common method currently available, accounting
for the majority of hydrogen produced in the United
States annually.
The production of SynGas or synthetic gas, which
consists of hydrogen produced from electrolysis
combined with CO/CO2 emissions produced by
industrial facilities offers another viable hydrogen
opportunity for Tasmania which could be readily
transported to Tasmanian users by the TGP.
9Spirit of Tasmania
While the planned replacement of the Spirt
of Tasmania vessels has been delayed, initial
design specifications confirmed the new
vessels will run on a combination of Liquefied
Natural Gas (LNG) and diesel.
An opportunity exists for the BOC Westbury
plant to become the LNG refuelling station
in Tasmania for the new Spirits, increasing
utilisation of the TGP and creating ongoing
local jobs.
In order to meet the LNG fuel requirements
of the new Spirits, it is estimated the BOC
Westbury plant capacity would need to be
tripled, creating an expected output value
increase of $22m per annum once the vessels
begin operation.
Tasmanian-based logistics company SeaRoad
have successfully used LNG powered cargo
ships for Bass Strait shipping since 2019.
Significant opportunities
for export growth in the
coming years… present
opportunities for the
TGP to further support
economic recovery in
the state, particularly
with a focus on advanced
manufacturing, mining,
hydrogen opportunities
and dairy export.
10Supporting
the community
The Tasmanian Gas Pipeline
is proud to support a range
of local community events
and initiatives.
Launceston Junior Soccer
Tournament
Devonport Cup Junior Soccer
Tournament
Hobart Soccer Tournament
Lobster Ponds Haven in Flowerdale
Bushwatch in Northern Tasmania
egional Womens Scholarship
R
program at Australian Maritime
College in Launceston and
University of Tasmania in Hobart
Northern Tasmanian Junior
Soccer Association junior girls’
representative teams
11Contact us
Wacek Lipski
General Manager
Tasmanian Gas Pipeline
E Wacek.lipski@palisadeims.com.au
M 0400 726 700
W tasmaniangaspipeline.com.au
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